A Firm Produces Three Items from a Single Process in Batches

question 82

Multiple Choice

A firm produces three items from a single process in batches containing 40 units A (a by-product) ; 100 units B; 100 units C. Separable costs and selling prices are:

Joint process costs are $30 000 per batch.
What is the amount of joint costs that would be allocated to B using the net realisable value method and treats by-product revenue as a reduction of the cost of the principal products?

• A) $7000
• B) $7500
• C) $15 000
• D) $14 000

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Definitions:

Exploit

To take unfair advantage of someone or something for one's own benefit, often without consideration for their welfare.

Radcliffe-Richards

Radcliffe-Richards might refer to a specific intellectual, academic, or researcher, potentially associated with discussions on morality, philosophy, or another specialized field.

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A strong feeling of aversion or repugnance, often in response to something perceived as unclean or offensive.

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